Solid 21, Inc. v. Richemont N. Am., Inc.

SOLID 21, INC., Plaintiff, v. RICHEMONT NORTH AMERICA, INC., ET AL., Defendants.

19 Civ. 1262 (LGS)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

June 8, 2020

OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:

Plaintiff Solid 21, Inc. ("Solid 21") brings this action against Defendants Richemont North America, Inc. ("Richemont NA"), Richemont International S.A. ("Richemont International"), Montblanc-Simplo GmbH ("Montblanc-Simplo") and Officine Panerai A.G. ("Panerai AG"). Plaintiff asserts claims for direct and contributory trademark infringement, unfair competition, trademark dilution and false description under the Lanham Act, and claims for trademark infringement, trademark dilution and deceptive acts and practices under New York Gen. Bus. Law ("GBL") §§ 349 and 360-l and New York common law. Defendants move to dismiss the Third Amended Complaint ("TAC") for failure to state a claim. For the reasons below, the motion to dismiss is denied in part and granted in part.

I. BACKGROUND

The following facts are taken from the TAC and exhibits attached to it, and are accepted as true for purposes of this motion only. See Yamashita v. Scholastic Inc., 936 F.3d 98, 103-04 (2d Cir. 2019).

Plaintiff owns the "RED GOLD®" trademark for use in connection with "a special alloying of gold with a distinct color made into fine jewelry," including watches. Plaintiff uses this trademark as a brand for its products. For example, Plaintiff advertises a set of luxury timepieces as part of the "RED GOLD®" collection. This brand is associated with, and promoted by, celebrities. The TAC alleges that consumers do not recognize "Red Gold" as a type of metal alloy but as a brand, while the terms "rose gold" or "pink gold" are well-known references to certain alloyed gold.

Defendants are business entities involved in the luxury watch industry. Each Defendant is a subsidiary of Compagnie Financiére Richemont, S.A. ("CFR"). CFR was previously dismissed as a defendant from this action. Richemont International, a corporation organized under the laws of Switzerland, designs and manufactures luxury watches for the Baume & Mercier, Montblanc, IWC and Panerai brands, and markets these watches in the United States. Richemont NA, a Delaware corporation, distributes, sells and also markets these branded watches in the United States. Montblanc-Simplo and Panerai AG, corporations organized internationally, each design, manufacture, distribute, sell and market in the United States Montblanc- and Panerai-branded watches, respectively. The TAC alleges that Defendants sold, marketed and advertised watches in the United States using the "RED GOLD®" mark through their websites and U.S. boutique stores. The TAC also alleges that Defendants supply these watches to third-party retailers -- including Saks Fifth Avenue, Abt, Mr. Porter and Sidney Thomas -- that advertise the goods on their own websites.

The "RED GOLD®" trademark has been the subject of multiple previous trademark and related state law actions around the United States. In 2011, Plaintiff filed a complaint against CFR and Richemont NA in the United States District Court for the Central District of California, alleging similar claims to those at issue in this case (the "2011 Lawsuit"). In 2014, the parties -- namely, Plaintiff, Defendant Richemont NA and CFR -- entered into an agreement (the "Agreement"), which tolled the statute of limitations for filing certain claims pending resolution of a third-party litigation (the "Hublot Action"). At issue here is a provision in the Agreement (the "immunity provision") that provides:

[Solid 21] reserves the right to refile the [2011 Lawsuit] against Richemont ("New Lawsuit") from the date of the Complete and Final Resolution with respect to the [Hublot Action] until twelve (12) months after that date. . . . [A]ny use of the term Red Gold, or any use of amber or red-hued gold, by or on behalf of Defendants from July 19, 2011 until the time any New Lawsuit is filed shall not be used against Richemont for any purpose in connection with the New Lawsuit.

(TAC, Ex. 11, ¶ 2) (emphasis in original). The Hublot Action resolved on October 5, 2018. On February 4, 2019, the 2011 Lawsuit was dismissed without prejudice. The instant lawsuit was filed on February 8, 2019.

II. STANDARD

To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). It is not enough for a plaintiff to allege facts that are consistent with liability; the complaint must "nudge[] their claims across the line from conceivable to plausible." Twombly, 550 U.S. at 570. The court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in favor of the non-moving party, see Montero v. City of Yonkers, 890 F.3d 386, 391 (2d Cir. 2018), but gives "no effect to legal conclusions," Stadnick v. Vivint Solar, Inc., 861 F.3d 31, 35 (2d Cir. 2017). "[A] well-pleaded complaint may proceed even if . . . actual proof of those facts is improbable." Twombly, 550 U.S. at 556.

III. DISCUSSION

With respect to the claims for trademark infringement, unfair competition, trademark dilution and false description under the Lanham Act (15 U.S.C. §§ 1114(1), 1125(a), 1125(c)), common law trademark infringement and injury to business reputation and trademark dilution under New York law (GBL § 360-l), Defendants' motion to dismiss is granted as to Defendant Panerai AG and otherwise denied. With respect to the contributory infringement claim, the motion to dismiss is granted as to Defendants Panerai AG and Montblanc-Simplo, but not as to Defendants Richemont International and Richemont NA. Defendants' motion to dismiss is granted with respect to the claim for deceptive acts and practices under New York Law (GBL § 349) as to all Defendants.

A. The Direct Trademark Claims

Defendants move to dismiss the direct trademark claims -- trademark infringement, unfair competition, trademark dilution and false description under the Lanham Act (15 U.S.C. §§ 1114(1), 1125(a), 1125(c)), common law trademark infringement and trademark dilution under New York law (GBL § 360-l) -- for two principal reasons: (1) the alleged conduct is not actionable because of the Agreement between Plaintiff and Defendant Richemont NA and CFR, and (2) the alleged conduct is fair use. Defendants also argue that the TAC does not sufficiently allege any direct trademark infringement in connection with the "Panerai brand." The arguments are evaluated with respect to each Defendant, rather than each brand as Defendant proposes, because each brand does not always correlate with any single Defendant.

1. Sufficiency of Direct Trademark Claims as to Defendant Panerai AG

The direct trademark claims against Panerai AG are dismissed because they do not sufficiently allege Panerai AG's infringing use. To prevail on a trademark infringement claim under the Lanham Act and state law, a plaintiff must establish, among other things, that the defendant has made "use in commerce" of the plaintiff's trademark. See 15 U.S.C. §§ 1114(1)(a), 1125(a)(1)(A); Rescuecom Corp. v. Google Inc., 562 F.3d 123, 127 (2d Cir. 2009); Salvatore Ferragamo S.p.A. v. Does 1-56, No. 18 Civ. 12069, 2020 WL 774237, at *2 (S.D.N.Y. Feb. 18, 2020) ("[T]he elements necessary to prevail on causes of action for trademark infringement and unfair competition under New York common law mirror the Lanham Act claims." (quotation marks omitted)); Allied Maint. Corp. v. Allied Mech. Trades, Inc., 369 N.E.2d 1162, 1164 (N.Y. 1977). A claim of trademark dilution under the Lanham Act and state law similarly require factual allegations about a defendant's use of the mark. See 15 U.S.C. § 1125(c); Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 736 F.3d 198, 210 (2d Cir. 2013); IGT v. High 5 Games, LLC, No. 17 Civ. 9792, 2019 WL 1651608, at *8 (S.D.N.Y. Mar. 29, 2019) (holding that the complaint adequately alleged a "likelihood of confusion," as required under GBL § 360-l, based on allegations of the defendant's "use").

The TAC alleges that Plaintiff owns a valid and legally protectable mark: "RED GOLD&reg." After Plaintiff used its trademark to promote its products, including its own luxury watches, Defendants "began selling, marketing, and advertising watches in the United States utilizing the RED GOLD® mark through their websites." (TAC, ¶ 34). The TAC delineates the respective business responsibilities of each Defendant and alleges that each Defendant is at least responsible for marketing certain luxury watch brands. Each Defendant is also responsible for other aspects of the business, including design, manufacturing, distribution or sales. The TAC also identifies the particular websites through which each Defendant allegedly marketed watches using the "RED GOLD®" mark.

The TAC also includes for each Defendant -- but not for Panerai AG -- well-pleaded factual allegations as to the use of the mark. The TAC identifies the particular watches that Richemont NA, Richemont International and Montblanc-Simplo marketed or sold, and appends as exhibits advertisements, showing the infringing language and where and when such use occurred. As the TAC does not include similar allegations describing how Panerai AG used "Red Gold" to sell, market or advertise watches through its website or store, the allegations of use by Defendant Panerai AG are merely "legal conclusion[s] couched as . . . factual allegation[s]." Twombly, 550 U.S. at 555 (citation omitted). See Lopez v. Bonanza.com, Inc., No. 17 Civ. 8493, 2019 WL 5199431, at *12 (S.D.N.Y...